The following is the text of a Fraud Alert sent by LAWPRO to Ontario lawyers on June 29, 2010. Due to the response we received from our previous alert on June 17 we felt it was important to make lawyers aware of new details we’ve learned about this scam.

Last week’s fraud warning e-blast on the collaborative family law agreement fraud prompted dozens of calls and emails to LAWPRO. At least 30 Ontario lawyers indicated they had been recently targeted or were in the middle of dealing with a matter involving this exact fraud. These calls and emails have helped up us better understand how this fraud works, and how the fraudsters are taking steps to appear ever more convincing and legitimate.

With this follow-up e-blast, we are sharing this information to help you avoid being duped. It is critical that all lawyers be alert to this and similar bad cheque frauds. Lawyers in Ontario and several other provinces are being targeted on a daily basis.

The essence of these bad cheque frauds is an otherwise legitimate-looking client file that creates circumstances that trick you into quickly disbursing funds from your trust account. The following points will help you appreciate that you must be wary of some of the circumstances that might otherwise make a fraud appear to be a legitimate client matter:

Don’t be fooled by e-mails personally addressed to you: Some of the initial contact messages we have seen are personalized with the lawyer’s first and last names appearing at the start of the body of the message. (See this post on the Avoid A Claim blog for an example of an initial contact message.)

Don’t be fooled by a follow-up to the initial contact message: Many lawyers who ignored the initial contact message received an email follow-up message asking if they received the initial contact message. See below for an example of one of these follow-up messages.

Don’t let you guard down because it is a referral from another Ontario lawyer: Two Ontario lawyers that don’t practice family law indicated that they forwarded the initial contact message to lawyers they knew practised family law.

Don’t be fooled by a referral from a foreign lawyer: In two instances the initial email was drafted to appear that it was coming as a referral from a UK lawyer.

Don’t be fooled by a British or European name: In earlier versions of this fraud the clients had an Asian name. In most of the more recent attempts the client has a British or European name.

Don’t be fooled by legitimate looking identification: The fraudsters are providing identification without hesitation. We have seen colour scans of the identification pages of a Chinese passport and US driver’s licences from various states including Michigan, Illinois, and Alabama.

Don’t be fooled by a “collaborative family law agreement”: We have seen seven different versions of the same collaborative agreement. See one version of it here. The only differences are the amounts owing and the names of the client, the ex-spouse and their respective lawyers.

Don’t be fooled by detailed background information: We have encouraged lawyers to ask for further background information when there are suspicions as to whether the matter is a fraud. This remains one of the best ways to determine if the matter is a legitimate one. However, the information provided by the client must be carefully reviewed for reasonableness and consistency as the replies to requests for further information are becoming more detailed and convincing. They now include information that ties the client to Ontario. See an example of a very detailed reply below.

Don’t be fooled by phone calls that appear to be from local numbers: A few lawyers have received phone calls from these fraudsters which caller-ID indicated were local calls (i.e. from the same area code). Note that it is very easy to fake or “spoof” an Ontario area code and phone number with calling cards or VOIP phones.

Don’t be fooled by local addresses and phone numbers: In some cases the fraudsters are providing background details that have a local nature; for example, an address where the couple lived, local home or work address for ex-spouse.

Trust your instincts

No doubt, some of you will say that all or most of the above points match many of your legitimate files. These bad cheque frauds are becoming far more sophisticated and spotting them is becoming much more difficult. In most cases there won’t be a single obvious factor that clearly indicates the matter is a fraud. It will be a number of smaller things that just don’t quite add up.

Trust your instincts. If things don’t add up, ask more questions and dig deeper. Get the client on the phone and ask them to provide further background and explanation for anything that is inconsistent or that doesn’t make sense. Have them confirm details in the information they already provided to you and be especially wary if the client is hesitant or unclear on background facts. Don’t be naïve. In reply to our blast last week one lawyer said, “I’m relieved to hear you say that because I’m feeling sheepish for not having recognized that this was a scam from the get-go.”

If you have suspicions, carefully check and verify any background details provided to you. Ask for documentation from the client that will confirm details of any information provided to you. You can do a reverse lookup of phone numbers provided to you or that appear on call display; Google any addresses provided to you. Get the names of lawyers that previously acted for the client or ex-spouse, check online databases to verify they are real lawyers and ask for permission to contact them.

Ultimately, getting the retainer funds or payments from the ex-spouse irrevocably wired to your bank account is the only way to really protect yourself from this type of fraud. If these wires are coming from another Canadian financial institution they should come via the Large Value Transaction System (“LVTS”). If they are coming from a financial entity outside of Canada, the client or ex-spouse’s bank should make arrangements with your bank to wire the funds to your account.

As an alternative to getting funds wired into your account, tell your client that your firm’s policy is that all funds deposited by cheque or bank draft will be held for 30 days or until your firm is able to get confirmation that the funds have cleared.

Finally, you should terminate the retainer if you remain suspicious that the matter is a fraud.

Beware of losses due to exchange rate fluctuations

Three lawyers indicated to us that their banks asked them to make up losses due to exchange rate fluctuations on US dollar cashier’s cheques they deposited that turned out to be counterfeit. These losses ranged from $3000-$5000. In one case the lawyer was successful in having the bank reverse these charges after he elevated a complaint above the branch level indicating that he had been told at the time of deposit that the instrument was valid.

Example of a follow-up message

We have seen several cases where lawyers reported that they received a second message that was a follow-up to the initial email contact. This is the text from one of those follow-up messages:

Dear Counsel

Good day to you. I sent you an email requesting for your assistance to act as my counsel to enforce payment from my ex husband. We have Collaborative Agreement which for sometime he has yet to comply. I contact you and you responded that you were willing to assist me.

Let me know if you are still interested in taking my case or not.

I anticipate your response soonest.

Regards
[Client first and last name]

Example of a very detailed reply to a request for further information

As stated above, the fraudsters are now providing more detailed background information. This is a reply that one lawyer received when they asked for more information:

Dear Counsel,

Good day to you and thanks for responding to my email. Like I mentioned in my previous email, I am currently in Asia on a charitable work with my church in helping out earthquake victims. We are 13-14 hours ahead of Ontario. As I’m writing you this message we are at the middle of the night. Communicating via phone is very tough here. Here is my pastor’s # you can reach me through 86131133599999. It barely go through due to bad network reception. So I will prefer communication via email as it’s easier for me and I have a steady access to Internet. I am also aware that retainer fee has to be paid, please send me your firm’s retainer agreement so that I can review it, signed and send back to you. Upon receipt of the retainer agreement, I shall make immediate arrangement for the retainer fee to be paid.

My full names are [First name, middle initial and last name] and my residential address is 60 Nettle Drive, Cleveland, GA 305281. I am US citizen. Attached is the CPLA, my ID and here is my SSN. 253 35 9390. We are not legally divorce yet and that I intend to do upon my return back to state. What we had was an out of court agreement {CPLA} which was entered into in the state of Georgia. We both used to live together at Georgia before he relocated back to Ontario after our separation. He owns properties in FL, NY, and Canada. I shall be returning back in couple of months but due to the urgency of this matter and the need of my settlement to be made to enable me start up a business, I want it to be resolve ASAP without possible litigation.

We agreed under this Collaborative Law Agreement for a onetime cash settlement of $378,450.00. To his credit, he has paid me $44,000 but still owing $334,450.00. Ever since he made a partial payment he has refused to come up with the due balance given one excuses to the other and he have the money to pay but won’t just want to pay. He is aware of my intention to seek legal actions. The lawyer that helped me with the matter earlier is retired now.

I will be pleased to provide further information on this matter including the CPLA which is attached. I expect this to be a non-litigation matter. I have already advised him I am planning on retaining a legal firm to litigate this issue if need be. He is not disputing it as he had previously made partial payment. Each time he noticed I am seeking a legal action, he always come up with the notion that he will pay but the moment I withdrew legal action, he will continue with same stories. He has the money but just wouldn’t want to pay the balance. I need this money to be able to start up my own business. With your involvement in this matter, I think it will go faster in collecting this fund because I know he doesn’t want to be litigated.

This time, I told him I will be contacting a law firm that will retrieve the money from him and that is why I would appreciate if your firm can help in collecting this fund. I am also aware that a retainer fee has to be paid. That is not a problem. If you will prefer your fee to be paid on an hourly rate basis or, on a percentage rate based on what you will collect from him on behalf of me, that will be also fine with me.

Please send me your firm’s agreement and also include your firm payment information just in case my ex husband want to make a full or partial payment he owes without further delays or possible litigation.

I am in Charleston, SC. The e-mail stunk of scam but I was convinced when the very letter I received in response to my request for more info, was word for word identical to the “very detailed reply” included in your post.

Thanks.

The cop in me still wants to catch these folks but I don’t have their techno savvy.

I received a similar inquiry this morning, but the context had changed from family law, to the enforcement of a workplace injury settlement. The facts were very believable, almost – except that the company chosen turned out to be a small mom & pop shop (and hardly a place with a warehouse), and lo and behold, the head office address was also 60 Nettle Road. We even have the (supposedly signed) settlement agreement, etc.